What is Relevant Life Cover?
Life assurance plans are a common feature associated with employees of countless businesses. While the intentions behind such vehicles are sound, there can be times when the policyholder is paying an incredibly high amount of taxes. Also, some plans are only meant to address business above a certain size (in terms of revenue and/or the number of employees). One way to address this issue is with the help of what is known as a relevant life insurance plan. What is relevant life cover intended to address, what are its benefits and what are the risks if such an option is not put into place?
A Look at the Basic Tenets of a Relevant Life Policy
To simplify things a bit, we can view relevant life insurance as a means by which tax-free benefits are paid to any dependants upon the death of the policyholder. It should also be mentioned here that it is possible to offset any premiums with the help of corporation tax. In other words, no tax will need to be paid on these premiums. Another interesting feature of these policies is that they are considered to be separate from a standard pension plan. Thus, additional benefits can be enjoyed alongside an existing retirement policy (or company-sponsored health insurance plan).
The Benefits of Relevant Life Cover
The main advantage has to do with the aforementioned tax implications. Still, there are other features which should be emphasised here. Many smaller companies may employ only a small number of individuals. This might not meet the criteria to set up a group scheme. So, this type of protection is ideal for budding enterprises.
Another important feature is that these plans can be separate from a group scheme. For example, let us imagine that a managing director wishes to provide “death in service” benefits to his or her dependants. However, it is not possible (or financially viable) to take out a group scheme for the entire company. Relevant coverage policies can be enacted on a one-off basis; saving a great deal of hassle.
Directors who earn a significant amount of income may also benefit from these options. This arises from the fact that a “death in service” clause may not be included within their standard insurance scheme. These high-earning professionals will therefore be able to provide substantial benefits to their loved ones.
The Risks of Failing to Adopt a Relevant Life Plan
There are two main risks should this policy not be present. First, the company in question could be obliged to pay higher taxes than are necessary. Secondly, smaller firms might not be able to qualify for a group scheme. This could result in the failure to pay vital premiums to dependants upon an untimely death while working for the company.
It is always important to appreciate how much these policies will cost. So, please feel free to utilise the form found above. You will receive an accurate quotation which will help you to make the best choices when the time is right.